Michael Corbat took over as the CEO of Citigroup in October and six weeks later he has announced that the megabank will eliminate 11,000 jobs worldwide. Some analysts are already speculating that Corbat is just carrying out the directions of Citi Chairman Michael O’Neill.
Corbat said that the closing of branches and jobs will save Citigroup $900 million in 2013 and $1.1 billion annually beginning in 2014. The savings will offset a loss of revenue estimated to be about $300 million annually. In his press release, Corbat said:
“These actions are logical next steps in Citi’s transformation. We will further increase our operating efficiency by reducing excess capacity and expenses, whether they center on technology, real estate or simplifying our operations.”
Among the areas being cut is their global consumer banking section which will lose 6,200. Citi is closing 84 branch offices worldwide, 44 of which are here in the US. They also announced that they will either sell off or drastically reduce their consumer lending in Pakistan, Paraguay, Romania, Turkey and Uruguay.
The corporate services, real estate and a section that they are currently trying to sell will account for another 2,300 jobs. Additionally, the securities, banking and transaction services will lose 1,900 jobs, mostly from operations and technical support areas.
Most of the megabanks are still experiencing some rather lean times in today’s economy. When business gets lean, the only way to increase those profit lines is to start cutting out some of the fat within the company.
When times were better and business and economy were booming, Citigroup was the largest of the big hour US banks (Bank of America, JP Morgan Chase and Wells Fargo). With the previous reduction in their mortgage business and now the newly announced cuts, Citigroup slides from the number 1 slot down to number 4 on the list of largest US banking companies.
While the news is not good for the jobs market, investors found the news to be fairly agreeable as Citigroup stock jumped 3.9% in the first 24 hours after the company’s announcement.
The federal government now needs to follow suit and start slashing and cutting departments and programs that aren’t needed. If Congress truly wanted to cut spending, they would pass a law forbidding the attachment of any riders to bills that called for spending for their pet projects. We could save billions right there. I bet a few of you and myself could get together and find enough areas to cut in the federal budget, oh yeah, there hasn’t been a budget for 4 years, to not only offset keeping the Bush era tax cuts but reduce the deficit by several trillion dollars. I also suspect that we could cut government spending to match or even go below the revenue currently being taken in. What? You mean only spending what comes in and no more borrowing? Yep! It’s very conceivable, but NO ONE in Washington is willing to do it. Not Democrats. Not Republicans. Not even Independents.
They wouldn’t run their own businesses that way, but they all fully intend to keep running our nation’s business that way. Perhaps it’s time for all responsible Americans to give Congress and the White House an ultimatum. Cut government spending to match CURRENT revenue income or we the people will amass and take over the government and do it ourselves.